Gold's price gives Indian jewelers little to celebrate on holiday

Tanya Gorowara looks in a mirror at an earring as she shops Wednesday at jewelry story Karat 22 in Houston. Aku Patel, owner of Karat 22, said gold prices are the highest he has seen and that shoppers are purchasing fewer traditional Diwali gifts. less

Tanya Gorowara looks in a mirror at an earring as she shops Wednesday at jewelry story Karat 22 in Houston. Aku Patel, owner of Karat 22, said gold prices are the highest he has seen and that shoppers are ... more

Photo: Brett Coomer, Chronicle

Photo: Brett Coomer, Chronicle

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Tanya Gorowara looks in a mirror at an earring as she shops Wednesday at jewelry story Karat 22 in Houston. Aku Patel, owner of Karat 22, said gold prices are the highest he has seen and that shoppers are purchasing fewer traditional Diwali gifts. less

Tanya Gorowara looks in a mirror at an earring as she shops Wednesday at jewelry story Karat 22 in Houston. Aku Patel, owner of Karat 22, said gold prices are the highest he has seen and that shoppers are ... more

Photo: Brett Coomer, Chronicle

Gold's price gives Indian jewelers little to celebrate on holiday

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Record-high gold prices have hurt business for local Indian jewelers during Diwali, the popular Hindu festival of lights and the start of a new fiscal year.

For the holiday, Hindus make special offerings to Lakshmi, the goddess of prosperity and wealth. The five-day festival began Wednesday with Dhanteras, when devotees may perform rituals at home over newly purchased gold jewelry or coins.

"It's a special day," said Sushma Pallod, a local Hindu leader. "It's an auspicious time to buy gold."

Jewelry store owners in the Harwin-Hillcroft shopping area anxiously watched gold prices hit one record high after another. On Thursday, gold prices hit a new high of $1,383.10 per ounce following the announcement of a new Federal Reserve stimulus.

The $600 billion Fed program further raised concerns over inflation and a weakening dollar, turning investors to commodities like gold.

For consumers, this ongoing gold rally has meant prices during the past two years have nearly doubled for their intricately designed, handmade necklaces, earrings, rings and cufflinks.

Indian jewelry already costs more than Western styles since it's made from 22-karat gold, which has higher gold content than 14-karat or 18-karat pieces.

Shoppers are spending $50 to $15,000 on jewelry for the holiday, shopkeepers said. This year, jewelers are raising their prices, but buyers aren't raising their budgets.

"If they say they are only going to spend $1,000, they are only going to spend $1,000," said Gobind Kamnani, owner of India Jewelers.

Jewelers take notice

At nearby Karat 22, they've already seen dramatic drops in sales.

"Even though the same number of people come into the store, the volume is less than half," said Aku Patel, who co-owns the store with his wife, Meena.

These local jewelers display a range of styles, from larger, traditional pieces to more delicate, diamond-filled contemporary designs. The showrooms smell a little like incense and include statues of Hindu deities, including Lakshmi, the multi-armed goddess often depicted distributing golden coins, and Ganesha, the elephant-headed god called upon to bring success and luck.

During Diwali, devotees will perform — at home and in temples — special pujas, or rituals, to Lakshmi to secure her blessing. She also represents light, and the holiday overall honors inner light over darkness and evil.

"It's a time of festivities, it's a time of puja and thanksgiving," said Viral Desai, of the BAPS Shri Swaminarayan Mandir, a Hindu temple in Stafford. "It's basically thanking God for all the wealth you have been given and making sure it's clean, that it has been acquired ethically."

Some Hindu business owners will bring their financial records - books, CDs and flash drives - to the temple tonight to be blessed for the new year, as a part of larger communitywide celebrations, Desai said.

'Small token' this year

Individual families will perform pujas at home according to their own traditions. One popular practice is to place gold coins and jewelry before Lakshmi's altar.

"This year we will buy a small token," Vijay Pallod assured his wife, Sushma.

They haven't purchased gold for Diwali in a few years, since their kids went off to college.

"That's where all the gold is now," she said.

The tradition of buying gold varies by family and budget, but jewelry is a typical Diwali gift for wives, in-laws and daughters. India is the world's largest consumer of gold, and last year, 56 metric tons of the metal were purchased during the week of Diwali alone.

Price mirrors inflation

In the U.S., first- and second-generation Indian-Americans continue to value gold jewelry.

From a financial perspective, gold's value is recognized worldwide, so it makes sense that this commodity has maintained its worth over time, according to Rick Kaplan, principal and chief investment officer of Legacy Asset Management in Houston.

It's an especially popular investment for people worried about the state of the U.S. economy and the dollar.

"As inflation starts picking up, gold should continue to go higher," Kaplan said. "I am not sure how much inflation is going to go up, but as long as it does, gold is going to get higher."